Aug 20 (Reuters) - Canada’s Valeant Pharmaceuticals International Inc said on Thursday it would buy Sprout Pharmaceuticals, which makes a controversial new drug to treat low sexual desire in women, for about $1 billion.

Valeant shares fell about 5 percent as Wall Street questioned whether the acquisition would be too risky for the big drugmaker, which has done six other deals this year.

The U.S. Food and Drug Administration approved Sprout’s Addyi on Tuesday after rejecting it twice. The pink pill proved only marginally effective in clinical trials and carries a strong warning about potentially dangerous low blood pressure and fainting, especially when taken with alcohol.

“Although the drug has a potentially large addressable patient population and will benefit from the marketing scale of Valeant’s sales force, acceptance of this product may ultimately be limited,” Morningstar Research analyst Michael Waterhouse said. Health insurers may not cover the drug, he added.

While Addyi has been nicknamed “female Viagra,” it works differently from Pfizer Inc’s product, which was introduced nearly two decades ago as the first drug for erectile dysfunction. Addyi is meant to activate sexual impulses in the brain and is taken daily, while Viagra affects blood flow and is taken as needed.

Valeant will pay $500 million now and $500 million early next year in cash, delaying the company’s plans to reduce debt from its $800 million purchase of Amoun Pharmaceutical announced last month and its $11 billion acquisition of Salix Pharmaceuticals, Moody’s Investors Service said. Including Sprout, the company has done $18.2 billion in deals so far this year.

Besides Addyi’s limited effectiveness and serious side effects, “we don’t know how big the market is for this condition,” Selvaraju said.

Sprout has said that up to 10 percent of American women have the condition, formally known as hypoactive sexual desire disorder.

Sprout has not set a price for Addyi yet and is waiting for word on reimbursement from health insurers. It expects the drug to have a co-pay of up to $75 per month. JP Morgan analyst Chris Schott expects a retail cost of $400 to $500 per month, similar to Viagra.

Valeant expects the deal to close this quarter and for Addyi to be available in the United States by the end of the year.

Valeant Chief Executive Officer Michael Pearson said in an interview that Addyi could be approved in Canada within a year. Approval in Europe, based on completed European studies, could take “a little longer,” he said.

Pearson said Valeant would probably make other women’s health acquisitions after Sprout is integrated.

After Addyi was approved, consumer watchdog group Public Citizen predicted it would be recalled within a few years because of “serious dangers to women, with little benefit” to them.

Asked if he was concerned about potential lawsuits from women claiming to have been harmed by Addyi, Pearson said the risks to patients would be minimized because the drug would only be available through doctors and pharmacies that have been trained in its use.